Pacific Health Corporation (PHC) has agreed to settle with the US and California and pay $16.5 million for an alleged “illegal kickback scheme.” This settlement resolves an investigation of 3 hospitals affiliated with PHC after paying recruiters “to deliver homeless Medicare or Medi-Cal beneficiaries (homeless beneficiaries) by ambulance from the ‘Skid Row’ area in Los Angeles to the hospitals for treatment that often was medically unnecessary.”


The hospitals involved were: Los Angeles Metropolitan Medical Center (LA Metro), Newport Specialty Hospital, and Anaheim General Hospital. These hospitals allegedly billed Medicare and Medi-Cal for these services, which violates the rules that state that payment is only required for necessary treatment. Because these services were found to be unnecessary, this violates the Anti-Kickback statute (AKS) and the False Claims Act.


As a result, LA Doctors Hospital Inc., a PHC subsidiary, has plead guilty to a federal conspiracy charge. And the hospitals, as well as Bellflower Medical Center, have signed a corporate integrity agreement with the Inspector General for the U.S. Department of Health and Human Services (HHS) so that they will be discouraged from violations in the future.


In 2010, Intercare Health Systems Inc. and its former owners Robert Bourseau and Rudra Sabaratnam, were charged for a similar kickback issue in Los Angeles. A few plead guilty, including Bourseau and Sabaratnam, who were sentenced to over five years in prison, collectively.


Anti-Kickback laws are important so that physicians are ethical and moral in their judgment and prescribing, rather than being distracted by finances.

For more information on this issue, contact the Kulkarni Law Firm.